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MANILA, Philippines – Ford is taking its Focus and Mazda 3 operations to Thailand amid an absence of government support, small local market, and higher production costs.
Ford Motors stopped assembling the Mazda 3 at its Philippine manufacturing facility in Sta. Rosa, Laguna in January, said Assistant VP of Communications Anika Salceda-Wycoco.
Ford is the Philippines’ only auto exporter. It assembled Ford Focus and Escape models at its Laguna facility and exported them to affiliates in Indonesia, Malaysia and Thailand since 2002. It also assembled Mazda 3 cars here and exported them to Thailand.
It will keep the Laguna plant as its production and export base in Asia for Ford Escape vehicles as the company studies the future of its local facility.
The Aquino Administration decided to shelve government’s Comprehensive Motor Vehicle Development Program pushed by former President Arroyo. The program has failed to expand the export volumes of completely-built-up exports and shipments abroad were limited to parts such as wiring harness and transmissions.
Ford officials noted that Filipinos are highly skilled workers, but they cited high production costs and the small local market as reasons for phasing out Philippine production of the two models in an interview with Interaksyon.com.
Ford sold 9,778 units in 2011 and exported almost half of its production from the Sta. Rosa assembly plant that can churn 25,000 units a year.
“Production cost in the Philippines is significantly higher than in Thailand because of a smaller domestic sales base, high power costs and limited availability of auto parts. With free trade within Asean, it’s difficult to export from the Philippines,” Ford Group Philippines president Randy Krieger once told reporters.
Compounding the fact the local market is not growing fast enough, government tax incentives for the company lapsed around 2010.
In contrast, the US government has granted tax incentives, boosting US sales of Ford, which is headquartered in Detroit. Thailand is considered Asia’s Detroit.
The American automaker chose to pour $450 million into a new passenger vehicle plant in Rayong, Thailand.
The move comes after a slump in the local auto industry.
Last year, floods in Thailand and the earthquake-tsunami twin disasters in Japan disrupted supply chains, causing auto sales in the Philippines to dip by 4% to 141,616 units from 2010, data from the Chamber of Automotive Manufacturers of the Philippines Inc. showed.
The Philippine Automotive Competitiveness Council Inc. has been supportive of extending tax perks to keep production in the Philippines, especially against more mature manufacturing bases like Thailand. –Rappler.com